"In the Tank Forever": U.S. Consumers, Retailers in a "Death Spiral," Davidowitz Says

"In the Tank Forever": U.S. Consumers, Retailers in a "Death Spiral," Davidowitz Says

finance.yahoo.com

"We are in the tank forever. As a country we are out of control, we're in a death spiral."

"We're in terrible shape. That's what the fundamentals tell me. I can't explain the stock market."

(visit the link for the full news article)



[edit on 8/27/2009 by Tentickles]

That one line says it all.

What's a death spiral literally?
Wikipedia

What is it figuratively?
The economy is going down, down, down, down and it's not going to stop until we hit the bottom and lose everything!

How long is it going to take for people to realize everything is not in the green and we are so far in the red we are purple....

finance.yahoo.com
(visit the link for the full news article)

I agree with your post..I firmly believe that we have been in a death spiral since last October. I also believe that our Goverment has been proping up the stock market ever since. They know what is coming, already came..they just don't want the American people to know..just not yet..not until they, the Goverment have things in place, to ward off the coming riots, unrest, looting, run on the banks, and the possible physical outing, by the American people, of all Goverment officials...
I began stock piling food last October, and continue today..
I grew a huge garden this spring, and everyday I dehydrate food and freeze food..I am exausted, but I know whats coming...
Unfortunately, everyone around me thinks I've gone off the deep end.
I feel sorry for them, and for thier children....
Bottom line: The Grasshopper tried to tell the Ant, but he just would not listen, and he starved to death due to his own ignorance...

Excelent post .
I have to say that I'm amazed that the whole thing hasn't blown up already I mean the entire economy is fake right...

Alright Ten.

We've had this discussion before. (stern voice) You better start finding some POSITIVE news! (good luck!)

I wonder when we are going to get the truth from the ones collecting and spending our taxes.


Sometimes when the sky is a really dark blue, I'd rather someone tell me that it's pink...but in the end, though I didn't really want to know the truth, I'm better off.

You've been a consistent source of economic indicators and I appreciate it. I may not LIKE it, but I appreciate it. Keep it up Ten!

In the video he also talks about bright spots. They are there.
The European economy is already on the rise once again; as is the Asian economy - China especially.

There is only so far to go down. Once enough stores close, then the ones that are left have an improved market share. The ones that know how to provide a good value will survive.

Americans are saving more than before. That may be bad for business in the short term, but it is good for everyone in the long term.

This mess you guys are in is a long overdue slap in the face for the craziness that had been going on for too long.

Don't worry. The country will survive and rebound. It might take a while, but it will happen. All the talk of riots in the streets is just as silly as the wild overspending that was taking place before.
I trust that the smarter minds will prevail.

reply to post by wayno


Too bad the smarter minds are not the policy makers

Can you say NAU

Death Spiral has another much more common name, one which i prefer to use because it doesn't actually mean "death" as in a finality ..

Deflationary Spiral.

Basically the root cause the the Deflationary Spiral that we are in was the vanishing credit..

While the economy seemingly "expanded" in the past 10 years, it really didn't.. the vast majority of wealth generated during this time period was in the form of Mortgages / real estate valuation increases. Obviously the effect of a booming housing market will spread throughout the entire economy.. If your house increases by 100k in a few short years you're gunna feel on top of the world.. But it was all fake. The credit expansion moved into the form of very cheap credit as far as car loans, credit cards, small business and pretty much any form of loan. All the while wage growth declined, and the gap between rich and poor hit historic levels.. When the credit vanished and won't come back we are left with a stagnate wage market to expand the current economy. Except, the wages are not growing, they are contracting.

In a normal economic recession the cause is generally "over production" .. eventually a "reset" or "correction" takes place and normal productive output starts anew, jobs come later as production and consumption increase. This is why Unemployment is seen as a "lagging indicator" .. However, this is not a "normal" recession.

This is a Depression, directly related to Credit and Deflation, the last time this happened was 1929, and in that depression Unemployment was NOT a lagging indicator. In fact, without wage growth and employment growth, not enough new money will enter the market to resume the "normal" consumption/production levels.. without cheap credit to expand, jobs and wage growth are the desperately needed factor missing in our supposed "recovery" .. The FEDS tried to bypass this by injecting trillions into the market.. the problem is, they are ignorant. The money went directly to the Industries, bypassing the consumer.. the idea was to generate jobs to generate wages to generate consumption. Trickle Down Economics. It doesn't work. The wages continue to decline, people continue to loose jobs, retailers will continue to decline, firing more people, ordering less, thus a deflationary spiral.

Deflationary Spirals end in three ways:

Sudden credit expansion (which sets the economy up for another collapse in a few short years)

Sudden Production output (Major Total Wars)

Bottoming Out: In this situation unemployment would have to be 40-60%, the economy would basically need a complete and total reset.. credit expansions are incredibly toxic to a normal working Capitalist economy.. it's wealth that isn't really wealth.. it's economic expansion that eventually needs to be repaid.

As for the Stock Markets..... That's your bailout money at work...

Rock is right, trickle simply doesn't work. You look at the goal of a business. To make money. If we just give them money, whats the point of trying? Why work for money if somebody will just give it to you for free? We would be better off feeding all that money directly to the consumer and letting them do what they do best, consume.

I would say that this guys prediction is a bit excessive and over the top, but I won't argue the ugly nature of the situation at hand. We are in for a long and hard ride.

Reply to post by Rockpuck

In your opinion how long would it take before unemployment rates are such that we fall in the "bottom out" category? I find that very interesting to think about so I'm just being curious.


Posted Via ATS Mobile: m.abovetopsecret.com

We had a Great Depression all right, but we also had World War Two to spur production.

I would agree that we're in a financial death spiral for three reasons.

We have spent far too much money.

We've created an entire population of financial and social parasites.

Government leaders in charge are too damned stupid to reverse it.

Not a problem. Every once in a while, a society with too many slugs needs a good enema. You let parasites accumulate, and they will eventually kill the host every time.

Too many tax eaters, not enough tax providers.

And the tax providers are damned tired of it.

reply to post by Rockpuck

Sudden Production output (Major Total Wars)

The scenario you describe sounds insular - as if the US was an island unto itself. Given the global nature of business, I am wondering if something other than war could help pull you out/raise demand for production; that is, demand from other countries where the economy has already begun to expand?

So many people in the US talk buy American, but it doesn't look like Americans can consume their way out of this on their own. They have to rely on international relations and an international market.

Im not well versed in finance...but i personally can't see such an economic implosion in the near future now.If you asked me at the start of the year my opinion would have been different.I think the world has already been robbed and now we will see a steady recovery sometime early next year...especially employment.Again though im not well versed in finance but i can't see all the doom and gloom that some people do,atleast not anymore.I think central banks,the IMF and the giants like Goldman sachs,deutsche bank,Bank of America etc can manipulate the economy and bend it into any shape they see fit.I do wonder what will happen when all that money banks have in reserve from the bailouts actually flow out again into the real economy...but like i said they can manipulate it imo.Im ready to be lectured about how wrong i am

reply to post by Solomons


The media hype of doom and gloom wore off already? Damn, that was fast. Its going to get worse before it gets better, and the vast majority of people won't realize it, and if they do feel it, they may not even realize its a result of the still troubled economy.

The problems of yesterday are still here today. Nothing has been fixed, just delayed by bailouts and confusion. If you thought it was possible 6 months ago, it's still just as possible today.

reply to post by wayno

So many people in the US talk buy American, but it doesn't look like Americans can consume their way out of this on their own. They have to rely on international relations and an international market.

What does America produce these days that the rest of the world desparately wants.....apart from weapons ?

Originally posted by KSPigpen
You've been a consistent source of economic indicators and I appreciate it. I may not LIKE it, but I appreciate it.

Keep it up Ten!

My mother agrees with you. All I talk about is the coming collapse. She likes to call it her "Ostrich syndrome."

So far I've pretty much reduced the economic mess we're in to the simple words: The end is near!

Kondratiev waves—also called Supercycles, surges, long waves or K-waves—are described as regular, sinusoidal-like cycles in the modern (capitalist) world economy. Averaging fifty and ranging from approximately forty to sixty years in length, the cycles consist of alternating periods between high sectoral growth and periods of relatively slow growth.

en.wikipedia.org...

That is, if you believe in them... (Someone evidently didn't since Kondratiev was executed at the height of Stalin's Great Purge)

According to this theory, there have been four technological waves. We are currently in wave five near where the depression portion of the cycle is supposed to be at. The wave peaked around 1984... and someone has been monkeying with the money supply to try and stave it off the downside of the curve.

Generally, an economy related war happens at the bottom of the depression side of the curve, and some new technology comes along to drive the next cycle.

1771 - Industrial Revolution - War of 1812
1829 -Steam and Railways - American Civil War
1875 - Steel, Electricity, Heavy Engineering - World War I
1908 - Oil, Auto, Mass Production - World War II
1971 - Information Age - - - - - -



[atsimg]http://files.abovetopsecret.com/images/member/01b5fd67ccce.png[/atsimg]

So... if true we should see a new technology somewhere between 2016 and 2034...

... maybe.

Edit Add - The obligatory NYT Opinion piece that predicted the housing bubble

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

www.nytimes.com...



[edit on 28-8-2009 by RoofMonkey]

Originally posted by ravenshadow13
Reply to post by Rockpuck

 

In your opinion how long would it take before unemployment rates are such that we fall in the "bottom out" category? I find that very interesting to think about so I'm just being curious.

 

Posted Via ATS Mobile: m.abovetopsecret.com

 

To reach the "bottom out" theory we must 1. consider the Government will allow that to happen.. as of right now with this continuous inflation of specific sectors of the economy, it's throwing the entire Economy out of whack.. it's not natural. 2. The Gov let businesses fail.. But assuming the Government did stop their spending spree and Businesses lowered production to levels equivalent to that which a natural curve in production could take place, I would hazard a guess at around 5 years to 10 years.

The "Curve" is the same curve that we see in a typical Recession, only it's much, much more severe.. it's like a body purging impurities from it's system. Eventually there will be so many unemployed and so little production that a point is reached where demand exceeds production, and the companies still around, as well as the many new ones, will very slowly start hiring workers to meet the demands using their new found wealth. The jobs accelerate and production does as well, as natural consumers are in the market. However, it should be noted that for this to work generally it's assumed the Nation is a net Exporter, no Importer. Our current situation has never happened before, where we have the Govs actions, coupled with the fact that we don't produce wealth. So who knows really?

reply to post by dooper


The Great Depression, as bad as it was, never experienced the usual recovery curve we see in Recessions. Unemployment in that case was a leading indicator, not a lagging indicator as Credit vanished with the banks, thus wage growth dictated economic growth. The Job explosion and coincidental extermination of many citizens through the war, allowed the system to recoup drastically in a short amount of time. I would bet on a major war before a "natural" recovery ever happens in the West.

reply to post by wayno

Given the global nature of business, I am wondering if something other than war could help pull you out/raise demand for production; that is, demand from other countries where the economy has already begun to expand?

A flawed logic for one reason: The US Consumes and Imports, we do not Produce and Export. So if the demands rise in emerging markets (and they are already) the US being a net importer will not take part in the recovery.. in fact, without the expansion of consumption power, the US won't even be able to Import as much. Basically, the Emerging Markets are still expanding because they can feed off the decline of these old dinosaur economies like America, Japan, Germany and Britain. It's much easier to come out of a recession/depression when you export, because that bring "new" wealth into the economy, without that ability we simply have to make it up.. well that violates one of the core fundamentals of Capitalist Economics.

reply to post by Rockpuck

The US Consumes and Imports, we do not Produce and Export

How carved in stone is that? Can that not be changed? Is this not the new reality that maybe you guys will have to become exporters in order to regain some solid ground?

With the emerging wealth in China the US will soon not be the biggest market in the world - they will be. Why would your home based companies not take advantage of that? Mind you, I am not talking about just moving operations there like GM because that wouldn't do your workers much good.

India is another place with a much greater population that is getting wealthier every day. Lots of opportunities out there, but to use an outdated phrase, it would be a major paradigm shift for you guys.

FINALLY! Someone speaks the truth..imma watch the msm and see if he gets any press for saying this.

IMHO one of thes problem with america is our standard of living is to high when compared with the other countries, especially ones we get our goods from. It's always gonna be cheaper to create and ship the product then making it in america itself.